Standard Oil Co. v. Wright Oil Service Co.

• Citation: 26 F.2d 895
• Decision Date: 12 June 1928
• Docket Number: No. 2703.,2703.
• Parties: STANDARD OIL CO. v. WRIGHT OIL SERVICE CO.
• Court: U.S. Court of Appeals — Fourth Circuit

26 F.2d 895 (1928)

STANDARD OIL CO. v. WRIGHT OIL SERVICE CO.

No. 2703.

Circuit Court of Appeals, Fourth Circuit.

June 12, 1928.

Douglas W. Brown, of Huntington, W. Va., and Rowland K. Adams, of Baltimore, Md. (Fitzpatrick, Brown & Davis, of Huntington, W. Va., on the brief), for plaintiff in error.

George S. Wallace and L. L. Wilson, both of Huntington, W. Va., for defendant in error.

Before WADDILL, PARKER, and NORTHCOTT, Circuit Judges.

PARKER, Circuit Judge.

Plaintiff in error, the Standard Oil Company of New Jersey, was plaintiff in the court below, and the Wright Oil Service Company, a corporation of Huntington, W. Va., was defendant. The action was instituted to recover on a contract for gasoline sold and delivered to defendant. There was no controversy as to any of the items embraced in the declaration, but defendant pleaded as a counterclaim that in violation of the contract plaintiff had collected from defendant a sum equal to the amount sued for in excess of the amount which it was entitled to receive thereunder. The case was heard before a jury, and there was a verdict for defendant. The only question presented here is whether the trial judge should have directed a verdict for plaintiff; and this question resolves itself into whether, viewed in the light most favorable to defendant, there was any substantial evidence to support the counterclaim asserted. We think that there was.

Defendant was engaged in the sale of oil and gasoline in Huntington, W. Va., and had been so engaged for a number of years prior to 1925. It not only operated a number of service stations on its own account, but also sold gasoline from tank wagons to such stations operated by others, and in this way handled gasoline in large quantities. It purchased from plaintiff in tank car quantities the gasoline which it sold, and, because of the large quantity purchased, because deliveries were made in tank cars, and because defendant made sales to service stations from its tank wagons, just as plaintiff did, and was thought to be entitled to a price which would enable it to realize a profit on such sales, the price charged defendant was uniformly 3 cents per gallon less than the price at which plaintiff sold the same quality of gasoline from its tank wagons.

On November 18, 1925, defendant entered into a contract with plaintiff to purchase 1,000,000 gallons of gasoline during the year 1926. This contract, which was in writing, contained the following provisions as to price:

"For the gasoline delivered hereunder, the purchaser shall pay to the seller the seller's tank wagon price (exclusive of tax) for `Standard' gasoline in effect at Huntington, W. Va., on the date of each shipment, less three cents per gallon. If, at any time during the terms of this contract, the seller's tank wagon price (exclusive of tax) for `Standard' gasoline in effect at Huntington, W. Va., is less than 15 cents per gallon, the seller shall have the option, to be exercised by giving the purchaser three (3) days' notice in writing or by telegraph, to suspend deliveries hereunder until such time as the tank wagon price is again 15 cents or more per gallon, unless the purchaser shall agree to pay for deliveries to be made hereunder such price as the seller shall from time to time designate." (Italics ours.)

At the time of the execution of the contract no question had arisen or could have arisen as to the meaning of the words "seller's tank wagon price * * * in effect at Huntington, W. Va.," as used in the contract; for plaintiff had only one tank wagon price at Huntington, which was the price at which sales were made from its tank wagons. Discounts were not given to customers purchasing from tank wagons, and there was no occasion to make any distinction between the tank wagon price as sent out from the headquarters of plaintiff company and the price actually charged in sales from tank wagons. In the latter part of the year 1925 and during the early part of the year 1926, however, a gasoline price war occurred in Huntington, and plaintiff began giving discounts to its tank wagon customers who would purchase large quantities of gasoline. While charging one tank wagon price to its customers who purchased small quantities, it allowed discounts therefrom of 1 cent, 1½ cents, or 1¾ cents per gallon to customers who purchased large quantities, thereby giving the latter a tank wagon price lower by the amount of the discount allowed. Plaintiff did not notify defendant of these discounts, but charged it for gasoline purchased under the contract at 3 cents per gallon less than the price charged the customers who purchased only in...